The Myth of East German Prosperity

WHEN Rheinhold Fichte, a prominent German communist industrial manager, defected a few weeks ago, he dramatized the best-kept secret of central Europe: the collapse of the myth of East German prosperity. Mr. Fichte was the quintessential product of what has been lauded as the one economic success of the communist world, the German Democratic Republic (DDR). He came from lowly Saxon origins, started life as a plates painter in Europe's largest porcelain works, was sponsored for a doctorate by the Socialist Unity Party, arrived as general manager of the industrial kombinate, and was a candidate member of the Central Committee.

Fichte lived in the high style of the East German nomenclatura, free to come and go to the West. But in March, he used a visit to the Household Fair in Cologne to abandon what the Frankfurter Algemeiner newspaper rightly called ``the ideal career in the East.'' The communists were quick to spread disinformation about a love affair. But Fichte's story is really the tale of the failing East German economy.

Fichte's former kombinate is East Germany's largest foreign-exchange earner. But the Dresden porcelain tradition, the oldest in Europe, is steadily eroding. Travelers to Meissen report elaborate displays of antiques, but ``sold out'' signs on items of quality. Designs and new materials, developed in Finland, Scandinavia, and the West, have left them behind.

In East Berlin, a factory outlet increasingly flogs seconds and thirds, a product of declining quality control. Nevertheless, they are snapped up by East Germans who, like most others in the communist bloc, have far more money than goods to buy. A West Berliner reports that his East Berlin cousins say they buy the ``junk'' because sooner or later those communist so-and-sos will find a way to soak up their excess purchasing power. (Critical East Berlin transactions, like getting a plumber, have to be made in West German marks. Otherwise you join the months-long queue.)

Attempts to cross the Berlin Wall have increased dramatically recently - with new shoot-to-kill orders among the hated VoPos, the communist border police. It is a sign of growing dissatisfaction among East German youth with declining economic prospects.

Fichte's problems at Meissen dramatize difficulties beyond East German porcelain. They are just another indication of the deep and insoluble economic problems in the communist bloc. In the past 15 years, East Germany has had its perestroika, a restructuring of the industrial machine into huge vertical trusts, efficient by communist standards.

Furthermore, the nation has special advantages: Not only does it have one of the oldest industrial traditions, but it has a special relationship to the prosperous West. Trade between the two Germanys is not only financed by Bonn, but is not considered ``foreign trade.'' That means East Germany has a back door to the Common Market.

The West Germans pour billions of deutsche marks into the East German economy. (A minister in the chancellor's office in Bonn told me that the West Germans don't know the total. It includes private remittances, outright gifts, subsidies, and trade. He said that for obvious political reasons he didn't want to know.) Payments go, literally, for buying the bodies of older relatives in East Germany who wanted to be buried in the West. They go for ``environmental subsidies'' to help control pollution of the north German rivers. Bonn is financing a new Autobahnen from Hamburg to Berlin (mainly for West German traffic, which will have to pay), and is negotiating financing of a new Hannover-Berlin rail line.

The East Germans have made communism work about as well it can. Some progressive Moscow economists used to talk about the ``DDRization'' of the Soviet economy as the way out of their dilemma. But even with hardworking Germans, East Germany achieved only half its planned growth last year; agricultural production declined by 8 percent; labor, energy, and materials are scarcer; a large part of the capital plant is obsolete; and applied research is declining.

``Always an ambitious plan can be achieved with supreme effort and through workers' initiative,'' says the East German Communist boss, Erich Honecker, who bitterly opposes the glasnost winds from Moscow. Fichte, and hundreds of thousands of other East Germans, obviously don't think so.

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